Follow-up meeting with municipalities in the North West province on issues raised during Committee’s oversight visit; with Deputy Minister

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Cooperative Governance and Traditional Affairs

20 September 2022
Chairperson: Mr F Xasa (ANC)
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Meeting Summary

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In a virtual meeting, the North West Department of Cooperative Governance, Human Settlements and Traditional Affairs (CoGHSTA) and the provincial treasury briefed the Committee on the deterioration in municipal affairs at municipalities in the province following a Committee oversight visit.
 
The North West province said that, following the establishment of new councils, there was instability in several municipalities. Political instability and alleged maladministration led to the poor functioning of these municipalities, which then affected service delivery. Twelve municipalities were under serious financial stress because of adopting unfunded budgets for the past five years and the lack of senior managers. A Treasury support team was deployed to municipalities to assist them. It also spoke to the state of finance in the municipalities, the audit outcomes of the last five years, and efforts to improve the audit outcomes.

The South African Local Government Association said that most of the challenges in North West municipalities were cross-cutting and included political instability, political infighting, limited tools of trade for the Municipal Public Accounts Committee (MPAC), councils not sitting as required, and non-quorate council meetings. The root causes were the lack of accountability, the delay in the engagement of consultants to prepare financial statements, an over-dependence on consultants, poor records management, and a lack or insufficiency of competent senior management. The Association’s interventions included the portfolio-based induction of all councillors in the North West, training on MPAC and financial and legislative prescripts and a portfolio-based induction training programme. SALGA resolved to be an observer in the recruitment processes of senior managers and had raised non-compliance issues with the department as they occurred. SALGA recommended the need for improvement of a structured relationship between itself and CoGHSTA, especially in the area of interventions, as SALGA believed better communications could result in improvements in the municipalities. SALGA proposed that standard operating procedures be introduced and the adoption of a number of recommendations.

Members asked numerous questions on corruption, compliance, and sustainable infrastructure oversight. They questioned municipal appointment processes, and the measures and alternatives that COGHSTA was putting in place to deal with the pertinent issues, including the fighting within the Council and municipality. Members said that there was a vacuum of proper leadership in that province. There was a myriad of issues, and all of them spoke to the inability of municipalities to deliver services because of political factionalism, uncontrolled ambition and unprincipled leadership. Members thought that the solutions presented would not work because these were political problems that required political solutions. Workshops would not solve political problems.

Members said that the adoption of unfunded budgets for five years was distressing. Members asked the provincial leaders why the code of conduct was not implemented. Members expressed concern about the lack of consequence management at both the political and administrative leadership levels. Councillors were not even meeting primary duties such as attending council meetings. Such councillors should have been removed long ago. A different approach was needed to deal with the North West.

The Chairperson said that public officials were accountable for the state of the departments they run. The Committee had to call municipalities to account, starting with the mayors, to ensure laws are executed by everyone.

Meeting report

The Chairperson opened the virtual meeting, welcoming the Members, support staff and all the guest delegates.

Briefing by the North West Provincial Government
Ms Lena Miga, MEC of Cooperative Governance, Human Settlements and Traditional Affairs (CoGHSTA), said that, following the local government elections in November 2021 and the establishment of new councils. it emerged through council reports that there was instability in Ditsobotla, Mamusa, Moses Kotane, Maquassi Hills Mahikeng, Tswaing, Kagisano Molopo and JB Marks municipalities. Political instability and alleged maladministration were amongst issues that led to the poor functioning of these municipalities, which affected service delivery – communities not getting access to basic services.

-In Mamusa, section 154-based support was provided because the municipality was in serious financial distress and lacked senior managers.

-In Makwassie, there were the challenges of instability. The Council was unstable and councillors were not united. The divisions were blamed on the municipal manager, with allegations of him bribing other councillors to buy votes, and that gangsters disturbed the smooth running of the municipality. An acting municipal manager was provided to the municipality.

-Moses Kotane Municipality had challenges in appointing section 79 committees by the Council. In Mahikeng, there were challenges of service delivery because of instability in the municipality to the point where ExCo dissolved the municipality.

-A support team was deployed to Tswaing Municipality.

-Kagisano Molopo had serious instability and service delivery challenges, and its municipal manager was very problematic. Section 139.1b would be instituted for the municipality.

-The Lekwa Teemane Municipality was a hung municipality, and there were also issues around renting an expensive mayoral car.

-In Ratlou Municipality, the SIU report was requested from Council. The report implicated the Municipal Manager. The Council’s strategy was to ensure the Municipal Manager’s term ended before the SIU report was implemented.

-In JB Marks Municipality, the executive mayor was asked to give consequence management reports on all who had been arrested there. In Matlosana, there were allegations that the mayor appointed security companies.

-Ditsobotla was a troubled municipality. Since inauguration, the Council was not able to agree on any compliance matter or service delivery issue. At one point, it had two mayors, two speakers and two municipal managers. The resolution was to withhold its equitable share and dissolve the municipality.

Ms Motlalepula Rosho,  North West MEC: Finance, said that the 12 municipalities in financial distress were in the North West, mainly because of adopting unfunded budgets for the past five years. Treasury had provided support, together with COGHSTA. Financial teams were seconded to do assessments as part of the financial recovery plans. These recovery plans were made essential to the process, in line with the dissolution of municipalities under Section 139.5c of the Constitution. In Kagisano Molopo, there was instability but not financial distress. However, there was an over-reliance on consultants. In Maquassi Hills, there was an acting Municipal Manager. A team was seconded to Tswaing to do assessments and a financial recovery plan. Mahikeng was in financial distress, yet the new councillors felt that the financial recovery plan took away from the powers of councils.

Mr Ndlela Kunene, Head of Department, NW Provincial Treasury, spoke to the state of finance in the municipalities; the audit outcome of the last five years; efforts to improve the audit outcomes; Treasury’s support programme for the municipalities, and financial recovery plans.

See presentation document for more details

Briefing by the South African Local Government Association
Mr Khumalo Molefe, SALGA Chairperson for North West, said that most of the challenges in North West municipalities were cross-cutting and included political instability, political infighting, and limited tools of trade for MPAC (Municipal Public Accounts Committee). Councils were not sitting as per the legislated prescripts, because council meetings were not quorate due to non-attendance of council members. He said that the root causes were lack of accountability, the delay in the engagement of consultants to prepare AFS (annual financial statements), an over-dependence on consultants for AFS, poor records management, and a lack or insufficiency of competent senior management.

He said that SALGA’s interventions included the portfolio-based induction of all councillors in the North West. The training was for MPAC, financial legislative prescripts, and a portfolio-based induction training programme. SALGA had identified a loophole and resolved to be an observer in the recruitment processes of senior managers. SALGA had raised non–compliance issues with the department as they occurred. SALGA recommended the need for improvement of a structured relationship between SALGA and COGHSTA, especially in the area of interventions, as SALGA believed that better communications could result in improvements in the municipalities. SALGA proposed to the Committee that standard operating procedures be introduced. If a department intervened in a municipality and sent an administrator, the official should be the equivalent of an accounting officer or senior manager. The pool from which people were recruited as intervention experts or specialists had to be open and transparent. SALGA wanted a role therein to ensure that the people sent to municipalities would make a difference and not worsen the situation. He said that some committees within municipalities were ineffective and not fully capacitated. He also said that if councillors were to be removed, there had be a public participation process in legislation or regulations to ensure stability in the councils.

Discussion
On the Sarafina Stadium, Mr M Groenewald (FF Plus) asked about corruption of R43m, where only a toilet was built. What action did the municipality take? What action was the mayor taking to ensure compliance when documents were requested? What steps was the mayor taking to ensure sustainable infrastructure? Was there an infrastructure master plan? Was there a viable strategic town-housing plan?
Mr Groenewald noted that the Potchefstroom Dam was identified as a COVID-19 isolation area, but there was fraud in upgrading the facility. Did the municipality have an oversight system in place for implementation? When would the acting municipal manager and director positions be filled? Given Potchefstroom’s historical heritage, what steps were being taken to prevent the burning down of a general’s house during a veld fire?
The sewerage plant at Groot Marico was supposed to have been fixed in 2019 but sewerage was recently found to be leaking out of the dams, contaminating freshwater resources. What steps was the mayor taking to ensure a safe environment? What steps were municipalities taking to ensure water supply through load shedding, and to curb water losses? The dams of Matlosana had great water losses; what steps were the municipality taking to ensure sustainable infrastructure? In terms of what law did the mayor, by himself, extend the term of a security contract? Why was the Maquassi Hills council having its meetings at a game lodge with transactions with the Phala-Phala Farm? Did the municipality have an asset register? The Tlou Municipality had SIU investigations conducted in terms of section 139. What is the status of those investigations? He also commended SALGA for presenting a good report.

Regarding the Mamusa Council, which was divided on the process of appointing an acting MM, Ms P Xaba-Ntshaba (ANC) commented that this was not appropriate. Why did municipalities appoint two acting Municipal Manager without following proper processes? If the Council was dealing with this issue, how was Council going to deal with issues of service delivery?

Ms Xaba-Ntshaba asked SALGA what measures and alternatives it had put in place to ensure that the council meetings were quorate. Issues constantly beset the North West, and there was fighting in the Council and municipality. What mechanisms was COGHSTA putting in place to deal with these matters?

Mr K Ceza (EFF) said that he did not see how the proposed changes would yield results because of the amount of factionalism in the ruling party in that province. In 2016, Mamusa had 11 disclaimers. There was no proper records management, and the Committee had discussed the political in-fighting and service delivery protests that affected audit processes. Administrators received threats and were prevented from entering buildings by protestors. Now, the same matters of that time were being discussed. Matters of unfunded budgets and giving new timeframes were just ‘kicking the goalposts down the road’.

On the issue of failed municipal managers, he said that failed managers resigned and were then recycled as administrators in municipalities that were put under section 139 intervention. How many interventions have yielded results? There was a vacuum of proper leadership in that province. There was a myriad of issues, and all of them spoke to the inability of municipalities to deliver services because of political factionalism, uncontrolled ambition, and unprincipled leadership.

On gangsters in councils, Mr A Matumba (EFF) noted that councillors said they were watched by gangsters when they took decisions contrary to what they were told to do. Was this matter reported to the police? He said that there was a big challenge regarding consequence management, when it came to politicians. Politicians thought they owned municipalities, and they did as they pleased.

He said that SALGA should be clear and say there was ANC political instability. The solutions presented would not work because it was a political problem that required a political solution. Workshops would not solve political problems.

At this point, the Chairperson noted that Deputy Minister Bapela said he would leave at 10.30am.

Regarding SALGA’s presentation, Mr C Brink (DA) said that he noted their concern on continuous motions of no confidence that resulted in an unstable council. What was SALGA’s proposal to deal with this needless instability? Was it legislative reform?

On recycling poor-performing officials, he asked national COGTA if re-promulgating the regulations regarding the blacklisting of poor-performing officials was close to finalisation.

Mr G Mpumza (ANC) said that it was distressing that, for five years, municipalities have been adopting unfunded budgets. He asked the MECs for COGHSTA and Finance what they had done to defuse the political instability in municipalities. He said that there were instances where municipalities had two mayors, two municipal managers, and two speakers, yet there was no sense that the provincial executive committees were addressing this. What allowed leadership to be tolerant of ill-discipline by councillors? Why did the provincial leaders not read the riot act against ill-disciplined councillors? Why was the code of conduct not implemented?

On unfunded budgets, he asked whether Treasury had not reviewed the draft budgets and intervened accordingly. He asked whether there were any cases of municipalities having two mayors or two municipal managers currently. Municipalities had been unstable for a long time, both politically and administratively. There were also instances where municipalities did not have municipal managers and CFOs for a long time. Where was provincial COGHSTA to provide that support to address such situations?

Ms D Direko (ANC) said there was no hope for changing the situation. Municipalities were still in the same situation they were previously in. What were possible solutions to change the situation? She said that, with the new amendments, if councillors were not performing their duties, they should be removed.

Ms E Spies (DA) said that Ms Direko had captured what she wanted to say. She recounted that the Committee had gone on an oversight visit, where Members were not welcomed. Nothing has changed since that visit. She said that political deployees had to be dealt with by their party. The issue was the lack of consequence at both the political and administrative leadership levels. Councillors were not even meeting primary duties such as attending council meetings. They should have been removed long ago. A different approach was needed to deal with the North West.

Mr Groenewald asked the Mayor of Lekwa Teemane if his family had any contracts with the municipality. Regarding Matlosana and Midvaal NPC that provided water to the area, he said Matlosana had a committee whose members sat on the board of Midvaal. Why was the mayor of Matlosana and other committee members appointed between 2011 and 2016 still on the Midvaal board? Midvaal had applied for a project worth R200bn, to provide water, while old Matlosana members were still on the Midvaal board representing the municipality. He told the MEC of provincial COGHSTA that he had applied for an open water report, which was declined. Criminal proceedings were being advised for contracts and supply chain irregularities. Civil proceedings have been instituted to get the lost money back. Was the report not being given because a HOD in the department was implicated in the report?

Mr Ceza said that sections 34 to 44 of the Municipal Finance Management Act (MFMA) said that national and provincial governments must assist municipalities in building capacity for effective, efficient, transparent financial management. What improvements have occurred since the Committee had discussed issues in a previous meeting? What solutions were being provided to issues other than complaining about political instability?

Responses

On the issue of Mamusa appointing two Municipal Managers (MM), MEC Miga said that this provided support within Mamusa. There was only one Acting MM running the administration.
 
On the issues pointing to political instability, she said that the legislation had now been amended. It would assist them, but they could not use it without invoking a section of the Constitution that took over the administration of the municipality. The issue of political instability started in 2016. The leadership had tried to intervene at the ExCo level, where the Premier established a team of three MECs, which had engagements with all these municipalities. However, some councillors did not even attend these meetings.

On the recycling of failed municipal managers, she said that this matter was discussed and resolved that such a situation would not happen again.

On whether there was hope for change, she said that there was, especially after the amendment to the Systems Act. Municipalities had also been raising the fact that interventions that did not come with funding did not assist.

On the matter of a mayor appointing an acting MM from outside the Council, she said that the code of conduct of councillors would be thrown at the mayor. It was clear when the matter was brought before COGHSTA that the mayor had acted outside of his boundaries. He was hence reprimanded for processing procedures properly through Council.

On the request for a report from 2015, she asked for details so that she could follow up on the matter.

On the water problem, she said that COGHSTA had established a war room on water, which met every day from 8am. The war room established the challenges regarding water. The authority therefore lies with the district municipalities.

On unfunded budgets, lack of improvement and the lack of support by Treasury, MEC Rosho said that political instability, which manifested itself in connivance with the governing party, was a challenge. A report was provided to ExCo. The challenge of unfunded budgets started in 2015/16. Over this time, support had been given, and experts had been seconded. The processes reached a point where mandatory intervention resulted. Recovery plans were developed internally but were not adequately implemented because councils employed officials who were not qualified. Structures were bloated – these people had no skills and were not equipped to do respond to the challenges confronting them in implementing service delivery programmes. These councils continued to employ more unskilled people, even though there was no structure or the structure was bloated. A skills audit was done in 2020 within all the budget and treasury offices in municipalities. The mayor, the speaker and the whip and Mayoral Committee (Mayco) members have asked to form part of the engagement at the administrative meetings of the mid-term budget reviews so that they can realise that the mayor needs to scrutinise these reports before they are tabled, so that senior management can be held to account.

Training had also been given so that MPACs could do their oversight work over councils. A five-day training was also given to Municipal Standard Chart of Accounts (mSCOA) training, so that they could hold councils to account. Supply chain management and contract management training had also been given to officials. Part of the induction programme for the new Council took them through the challenge of unfunded budgets. The challenge now was the interpretation of section 139. The Constitution saw it as a mandatory intervention, while councillors felt discomfort. A roadshow explained the discretionary and mandatory interventions. Provincial Treasury had appointed district directors supporting all municipalities. However, the reality was that, in the budget and treasury offices of municipalities, there was no capacity because of council management decisions made by officials who were not held accountable, across the board. CFOs were seconded to municipalities to get the accounting systems sorted, but the councillors caused their own councils to collapse. They appointed CFOs without qualifications. Some councillors did not come to engagements called by the Provincial Treasury, while others left the meeting early.

Mr Matumba advised that municipalities should move away from water tanker contracts because they would be inviting more gangsters. He pointed out that the question of gangsters was not answered. What did the officials mean by saying that they had a problem of gangsters in councils? He added that departments that owed municipalities should have their services cut off.

He said there had to be a recruitment timeline to limit acting municipal managers' tenures. He said that legislation could not solve political problems. Political leadership was required to deal with councillors. Politicians needed to know their duties and perform them.

Mr Ceza said that his question on timeframes was not answered. Given their dysfunctionality and instability, he asked how many municipalities were heading for section 139.1c.

Ms Direko said that North West had serious problems that needed serious intervention. She requested that the Committee programme include meetings with the municipalities for them to account for themselves. Why were councillors receiving salaries when they were not doing their work? They were being compensated for non-performance. How many municipalities should be disbanded?

MEC Rosho said that only one municipality had been dissolved, and it was under section 139.1b. There were, however, six municipalities in financial distress, where interventions would also take place in the form of financial recovery plans. In the dissolved municipality, Council had refused the Public Protector’s report, and had refused to implement an SIU report. There were also some continuous irregular appointments resulting in a bloated structure.

The Chairperson said that everyone was getting frustrated with the situation of municipalities. He said that they, as Members of Parliament, only passed laws. They expected all three spheres of government implement the laws. All public officials were accountable, and the Committee had to call municipalities to account – starting with the mayors – to ensure laws were executed by everyone.

On the interpretation of s139, he said that it required a decision. He asked what was holding back the monitoring and evaluation legislation. One could not allow the country to be in a state of anarchy run by gangsters. These gangsters need to be stopped.

The meeting was adjourned.

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